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iGATE Q2 net surges

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CIOL Bureau
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BANGALORE: Mid-sized Indian software and business services firm iGATE Global Solutions Ltd. reported a 368-percent leap in second-quarter profit as it cut costs by doing more work at home than at client sites overseas.



The chief executive of iGATE, which is 88-percent-owned by U.S. based iGATE Corp., said in an interview that the Indian company may raise fresh equity to fuel growth as it aims to add 10 Fortune 1000 clients every quarter.



Its July-September net profit rose to Rs 3.04 crore from Rs 65 lakh a year ago, while revenue rose marginally to Rs 149 crore from Rs 145 crore.



Shares in iGATE were down one percent at Rs 296.50 in midday trade on the Bombay Stock Exchange, while the benchmark 30-share index eased 0.4 percent.



The company, which counts among its customers General Electric and tobacco firm Philip Morris, affiliated to the Altria Group, said it added 12 more clients in the latest quarter, including five Fortune 1000 companies.



Murthy said iGATE plans to add 300 software staff and 150 in business services in the current quarter.



The company cut administration costs and increased the share of its service work done in lower-cost India to 57 percent from 54 percent in the previous quarter.



"I am cleaning up the body (shopping) and sub-contract kind of business," said Murthy, a former head of sales at India's No.2 software service exporter, Infosys Technologies Ltd.



Murthy, who drove Infosys's aggressive sales growth through the late 1990s, is on a mission to put iGATE in the top league by luring clients through a pricing model based more on the value of work done than how many hours employees bill, as most rivals do.



But he faces a tough challenge in positioning iGATE in a market where half-a-dozen listed players are ahead in the game.



"Is that a cause for worry? Absolutely," Murthy said.



But he added that iGATE's restructuring, aided by transaction-based pricing, was "looking good".

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